By: Jasmine Jiang

Alex Manshinsky, founder and former chief executive of Celsius was arrested on Thursday at his home in New York for defrauding customers and lying about his firm’s business model (New York Times, 2023).

Federal prosecutors said, “Mr. Mashinsky, misled customers into believing that Celsius was a safe place to park their money, when in reality it was fraught with risks.” He was also sued by many places, like the Security and Exchange Commission (New York Times, 2023).

He was charged with wire fraud, commodities fraud and manipulation of securities prices.

Celsius is a bankrupt cryptocurrency lending company. When Celsius was founded in 2017. Mr. Manshinsky claimed that Celsius was safer and more equal than traditional banks. When Celsius was at its peak they were handing over 25 billion dollars. However, last year in 2022, the company filed for bankruptcy and traumatized many users who lost lots of money.

About $4.7 billion in customer assets were frozen on the company’s platform. In a settlement with the F.T.C. announced on Thursday, Celsius agreed to pay that amount in restitution to customers, although the payments will be suspended while the bankruptcy process unfolds (New York Times, 2023)

Authorities even said that Manshinsky lied to many investors about how many customers were using Celsius, when in reality only 1.7 million people were using the services. He told many false things to investors, making them want to invest in his so-called safe company (New York Times, 2023).

“Mashinsky portrayed Celsius as a modern day bank, where customers could safely deposit crypto assets and earn interest,” the indictment said. “In truth, however, Mashinsky operated Celsius as a risky investment fund, taking in customer money under false and misleading pretenses” (New York Times, 2023).

Alex Manshinsky is not the only crypto executive being held with charges. Others, like Sam Bankman-Fried, founder of FTX, was also arrested on fraud charges.